Gyeonggi-do, 65 Including Real Estate Agents Involved in Illegal Suwon Jeonse Fraud 'Exposed'

Gyeonggi Province has identified 65 licensed real estate agents and brokerage assistants suspected of involvement in a jeonse fraud related to the Jeong family in Suwon, and has sent 24 of them to the prosecution.

Gyeonggi Province announced on the 14th that it investigated 28 licensed real estate agencies suspected of participating in the jeonse fraud related to the Jeong family in Suwon from October last year to February this year, uncovering 36 licensed real estate agents and 29 brokerage assistants. The police have sent 24 of those who completed investigations to the prosecution.

The total number of properties brokered by them was 540, and it was revealed that they received excessive brokerage fees for 380 cases, accounting for 70% of the total. The total deposit amount that tenants could not recover was 72.2 billion KRW.

The exposed brokers mainly used social networking service (SNS) group chat rooms to induce tenants to sign contracts at high prices for newly built villas or villas that were difficult to rent, receiving fees higher than the legal brokerage fees from the Jeong family. The total amount of excess fees identified so far was 290 million KRW for 380 cases.

In a key case, licensed real estate agent A and brokerage assistants charged tenants the legal brokerage fee but received higher fees than the legal brokerage fee from the Jeong family, then divided the excess fees according to a pre-agreed ratio. For example, when the legal fee was about 800,000 KRW, agent A and the brokerage assistants received excess fees ranging from at least 1 million KRW to as much as 5 million KRW.

Through this method, agent A and the brokerage assistants handled 176 cases, collecting 160 million KRW, which is twice the legal brokerage fee of 80 million KRW. In particular, when it became difficult to lease properties owned by the Jeong family due to high mortgages, they successfully closed deals by charging 5 million KRW, which is 16 times the legal fee.

Gyeonggi Provincial Government

Meanwhile, brokerage assistant B, who did not have a licensed real estate agent qualification, independently signed lease contracts, received brokerage fees into their own account, and sent 500,000 KRW monthly to licensed real estate agent C as a seat rent.

Licensed real estate agent F and two brokerage assistants also used a method of falsely explaining the mortgages set on buildings to close deals. For example, in the case of a four-story building with mortgages of about 2 billion KRW on all floors, they only disclosed the 500 million KRW mortgage on the second floor property that the lessor wanted to trade, thereby understating the total mortgage on the building.

During the investigation in Gyeonggi Province, it was found that they knowingly brokered properties that would become "empty jeonse" (where the jeonse deposit is higher than the property price due to a decline in real estate prices, causing tenants to be unable to recover their deposits) and collected high performance fees as compensation.

Under the current Licensed Real Estate Agent Act, illegal brokerage activities, if detected, are punishable by imprisonment of up to one year or a fine of up to 10 million KRW.

Ko Jung-guk, Director of the Land Information Division of Gyeonggi Province, said, "As the housing market has recently entered a downward trend, the number of ‘reverse jeonse’ properties, where the jeonse price is lower than the existing deposit, is increasing, and illegal brokerage activities are likely to rise accordingly. Tenants need to exercise special caution by checking surrounding jeonse prices using the Gyeonggi Real Estate Portal when signing jeonse contracts."

Meanwhile, Gyeonggi Province plans to strengthen investigations into related crimes along with a comprehensive inspection of the real estate market.

They will restrict licensed real estate agents and brokerage assistants involved in illegal activities from returning to the brokerage business and propose to the Ministry of Land, Infrastructure and Transport that licensed real estate agents who have been administratively punished for violating laws be mandatorily disclosed so that the general public can be informed.

This content was produced with the assistance of AI translation services.